Supply chain solutions company DNA Supply Chain Investments and investment company Letsema have proposed a deal which could see a DNA subsidiary become a black empowerment-controlled company.
Letsema has been DNA`s black empowerment partner since 1998.
DNA says a black empowerment company, which is still to be formed, may ultimately become the controlling shareholder of Cadre Management Services, which houses freight logistics and bulk materials handling specialist, DNA Micor.
A black empowerment trust is to be formed as the sole shareholder of the empowerment company, with the trust`s beneficiaries being Letsema and other selected black empowerment partners.
"DNA acknowledges the need to empower historically disadvantaged individuals and to remain abreast of the dynamic business climate in SA," the group says.
"By introducing value adding empowerment shareholders, DNA Micor will not only be positioned to access strategic new business opportunities, but will also be assuming a leadership position in an industry where customers and strategic partners are becoming increasingly sensitive to the empowerment profile of their business associates."
In the first stage of the deal, the black empowerment company will subscribe for nil coupon redeemable preference shares in DNA Micor`s operating subsidiaries.
The preference shares will provide the empowerment company with 51% of the voting rights but none of the economic rights in the subsidiaries, while DNA Micor will retain all the existing ordinary shares in the subsidiaries.
These will carry 49% of the voting rights and all the economic rights in its subsidiaries.
The second stage of the deal will see the preference shares being redeemed and exchanged for new ordinary shares in Cadre by no later than 1 July 2006 in accordance with a formula. The formula is to determine the number of ordinary shares to be received by the empowerment company with reference to its contribution towards enhancing the earnings of DNA Micor`s operating subsidiaries.
DNA issued a trading update last month in which it warned that a shift to a longer-term focus would affect short-term earnings.
Among other factors influencing its performance was the longer than expected integration of its newer businesses, technology companies Jumpoint and Streamworks.
However, the group said it was comfortable with its positioning and was confident the benefits of its longer-term focus would be realised in the next financial period.
The DNA share was trading unchanged at 34c on the JSE this morning.
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